Establishing Internal Control Standards and Establishing a Materiality Threshold

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CITY OF SOUTH BEND, INDIANA • A review is completed by an individual outside the disbursement process in which the claim amount is compared to the supporting documentation attached to the claim and the amount of the check. This review and approval is made at the departmental level. • Access to disbursement applications is appropriately controlled by user login and passwords. • The City Controller, or his/her designee, will review claims prior to payment. • The Purchasing Manager, or his /her designee, will review requisitions submitted and issue all purchase orders. • With limited exceptions, all disbursements will require a properly approved invoice and a purchase order prior to payment. • The City uses a "positive pay" program with 1St Source Bank to preauthorize accounts payable checks to be honored by the bank and identify fraudulent checks issued by other parties attempting to use City information. Receipting Activities • The responsibility for collecting money and issuing receipts is segregated from those preparing the bank deposit. • The responsibility for making bank deposits is segregated from those preparing the monthly bank reconcilement. • Pre - numbered receipts are issued for all money collected and the receipt is retained with supporting documentation. • Receipts are reconciled to the cash receipts ledger by an individual other than the one collecting money and issuing receipts. • Posting of receipts to the ledger is completed by an individual other than the one who collects money and makes the deposit. • Receipts indicate the type of payment received (cash, check, etc.) and this is reconciled to the make -up of the bank deposit. • Accounts receivable records are maintained by an individual other than the one(s) involved in the billing process. • The billing process is completed by an individual other than the one who collects cash payments from customers. • Customer account adjustments above the $500 materiality threshold, stated in this policy, are approved by the Board of Public Works only after review. Cash Activities • A reconcilement between the recorded cash balance and the bank balance is completed monthly by an individual separate from the receipting and disbursing processes. • A reconcilement between the receipts ledger and the credits to the bank account is completed periodically by an individual separate of the receipting process. • A reconcilement between the disbursement ledger and the debits to the bank account is completed periodically by an individual separate of the disbursement process. • The monthly reconcilement between the cash balance and the bank balance is thoroughly reviewed and approved by the City Controller or his/her designee. • Disbursements from and reimbursements to petty cash funds are periodically reviewed by an individual other than the one responsible for maintaining the petty cash fund. Internal Controls Policy Pursuant to I.C. 5- 11 -1 -27